The new administration of President Rodrigo Duterte will
turn 100 days old this week. The basis for its assessment is still sketchy and
raw, so one way to further assess it later is to see some baseline figures when
it assumed office.
Stratbase-Albert del Rosario Institute (ADRi) conducted a
forum last Sept. 28 on “Raising the Next Tiger: The New Administration’s
Economic Priorities” at The Tower Club in Makati. The main speakers were Mr.
Aekapol Chongvilaivan, Country Economist, Philippines Country Office, Asian
Development Bank (ADB); Department of Budget and Management (DBM) Secretary Ben
Diokno; and Bangko Sentral ng Pilipinas (BSP) Deputy Governor for Monetary
Stability Sector, Diwa Guinigundo.
The various reactors and discussants included Mr. George
Barcelon, president of the Philippine Chamber of Commerce and Industry (PCCI);
Mr. Calixto Chikiamco, president of the Foundation for Economic Freedom (FEF);
Ambassador Donald Dee, president of the Employers Confederation of the
Philippines (ECOP); and Mr. George Chua, president of the Financial Executives
of the Philippines (FINEX).
These four reactors particularly mentioned the high
prices and limited capacity of the Philippine’s energy sector. They pointed out
that this factor, among others, reduces the country’s competitiveness compared
to our ASEAN neighbors. Mr. Chikiamco and Mr. Chua in particular mentioned the
problem of pushing more renewables wind and solar into the national grid as
contributing to rising electricity prices and even affecting the grid
stability.
Below are some numbers presented during the forum. I
added the data on electricity generation (in terawatt hours) to further
contextualize the points made by the four mentioned discussants (see Table 1).
Sec. Diokno did not give comparative data for some ASEAN
countries, only the Philippines’ fiscal data. He only emphasized the bigger
focus of Duterte administration to expand and improve the country’s
infrastructure to address the Philippines’ low rank in global competitiveness
surveys.
Public spending by the national government for
infrastructure are as follows: P165B in 2010, P175B in 2011, P216B in 2012,
P307B in 2013, P346B in 2014, P576B in 2015, P756B in 2016, and P861B proposed
in 2017. These numbers indicate a sustained increase in infrastructure spending
from 2015 until next year.
So as baseline data: First, the Philippine economy has
been growing rather fast until 2015 and the challenge is how to sustain this
expansion. Second, overall global competitiveness is good enough but ranking in
infrastructure quality is low. And third, growth of our power generation
remained low, only 46% after one decade. In contrast, Indonesia’s power
capacity has expanded nearly twice after a decade while Vietnam’s has expanded
more than three times.
The big challenge therefore is to allocate more public
resources for infrastructure development.
To get the additional funds, the new government will have
to discontinue -- or at least significantly cut the budgets -- of some programs
and projects that have questionable impact on poverty alleviation. These funds
should then be reallocated to help bankroll more infrastructure projects.
Second, attract more private players and investors in
coal and natural gas power generation, in road tollways, in seaports and
airports, in rail-based urban transportation. This process is non-burdensome to
taxpayers because these public goods are funded via user-pay principle.
For instance, only those who regularly use NLEx and SLEx
pay for the capital expenditure and maintenance of those roads, not taxpayers
who live far away who hardly ever use these roads.
It is also good that the President has explicitly
declared that we cannot turn our back in using cheaper and stable energy from
fossil fuels like coal and natural because of our fast rising energy demand
that require 24/7 power. It is not possible to sustain fast growth without
cheaper and stable electricity supply. Energy precedes economic development, it
is not vice versa.
In the presentation by Mr. Guinigundo, he showed
important reform measures from 1993 to 2016. I will show here some, especially
those referring to enhancing more economic competition, liberalization and
deregulation (see Table 2).
If we remove the uncertainties of murders and disrespect
for due process related to the ongoing “war on drugs,” the Duterte
administration is starting on good and relatively stable macroeconomic
platform. It just needs to sustain the momentum while hastening development and
expansion of public infrastructure, especially in roads and energy.
---------------
See also:
BWorld 84, Eliminate red tape in the Philippine energy sector, October 08, 2016
BWorld 86, Philippine industrial policy, October 15, 2016
No comments:
Post a Comment